GTB price rigging report may nail Big Bull

GTB price rigging report may nail Big Bull
ENS ECONOMIC BUREAU

MUMBAI, MAR 29: The investigation into price rigging in Global Trust Bank shares is expected to throw light on the involvement of big bull Ketan Parekh. The Sebi report on Global Trust Bank's share price movements is expected to confirm that there was indeed manipulation in the bank's share prices. The Reserve Bank of India (RBI) is waiting for the Sebi probe report before deciding on the UTI Bank-GTB merger, despite a second valuation report submitted by UTI Bank which has confirmed the initial valuation.

Sources said that while the securities market regulator had earlier said there was prima facie evidence of manipulation in the GTB stock, the report, which is in the final stages of preparation, is likely to confirm this view. The report is also expected to discuss the role of other bull operators in the context of GTB shares. ``But these will not be the only things in the report. There will be more,'' sources said. Sebi is probing whether the big bull had manipulated the GTB share price so as to get a swap ratio in favour of GTB. Sebi has conveyed to the RBI that it would submit its report to the apex bank at the earliest, and the RBI feels it would only be proper to take a decision on the merger after going through the Sebi report. On its part, RBI has not found any irregularities in the case of GTB as far as prudential norms were concerned. A meeting of the two regulators on the issue is also not ruled out.

The valuation report by the second valuer Deloitte, Haskins & Sells, on the swap ratio for the merger of the two private sector banks, has been submitted to the RBI and it (the RBI) would take six to eight weeks to take a decision, the UTI chief told reporters on the sidelines of a corporate governance award function held in Mumbai.

UTI officials had said that in the first valuation report, SBI Capital Markets had suggested a swap ratio in the range of 2.1-2.5:1 for merging UTI Bank with GTB and that the second valuer has also suggested a similar ratio.

Meanwhile, the merger between UTI Bank and Global Trust Bank is actually a takeover of GTB by UTI Bank though the transaction is structured in such a way that it appears like a merger, sources said.

According to industry experts, since UTI Bank is surrendering its licence to the RBI and the merged entity UTI Global Bank would be doing business with the licence of GTB, theoretically it is a takeover of UTI Bank by GTB. But with eight out of the twelve nominees from UTI Bank, UTI Bank has a controlling stake in the Board. "It is a merger in the legal sense. On a more practical basis, it is a takeover of GTB by UTI Bank," said an analyst.

UTI buys HFCL NCDs before crash: THE Unit Trust of India (UTI) has subscribed to the non-convertible debentures (NCD) of Himachal Futuristic Communication Ltd (HFCL) amounting to Rs 50 crore. The NCDs were subscribed by UTI on March 1, 2001, just a day before the crash of the stock markets.

However, a section of the market is looking at the placement of the NCDs with suspicion. But the most important part is the timing of the placement of these debentures. From mid-February there has been a sharp fall in the stock price of HFCL and the major factor, according to market players, is that the technology bull Ketan Parekh was selling the stock due to his financial problems. HFCL stock had come down from around Rs 700 to less than Rs 200 in a month. There is also a feeling in the stock market that this amount was taken by HFCL for Ketan Parekh to meet his obligations towards his financiers.

There have already been reports in a section of market about the financial problems being faced by Ketan Parekh. Last year, HFCL promoter Vinay Maloo, Ketan Parekh and Kerry Packer had floated a venture capital fund for investment in new initiatives in India, which also indicates close links between HFCL and Ketan Parekh, said a source.

However, UTI has a different story to tell on the subscription of these NCDs. In a letter written to Kirit Somaiya, BJP MP and chairman of the Investor's Grievance Forum by UTI chief general manager SS Nayak, the latter says, "Investments by UTI are made only after all norms and criteria of investment valuation are taken into account with due diligence."